Japan Web3 Roundup: JBA advocating tax cuts, Dentsu x SUI, and Loyalty points moving on-chain

GM everyone,

or Ohayogozaimasu - as they say in Japan. ☕

Read on for your bi-weekly dose of all the important things happening in the land of the rising sun:

JBA advocating for tax cuts

According to Benjamin Franklin, there are only two certainties in life: death and taxes. Especially for crypto startups, the latter has been a challenging territory to navigate in Japan. That’s why the Japanese Blockchain Association, a non-governmental lobbying group for the crypto industry, is now advocating for a change in the national tax regime. So far, crypto taxes in Japan have been notoriously high, leading startups and VCs to set up their legal entities outside of Japan not to have to pay taxes on unrealized gains.

In addition to removing the taxation of unrealized gains, the JBA also asks the government to consider simplifying taxes on income from exchanges, as particularly remote workers would struggle with such. Lastly, the recommendations also ask for the ability to deduce losses from crypto holdings over three years.

Takeaway: Crypto taxation is a significant friction point and drives companies away if more attractive alternatives exist. The current regime is not in line with the overall positive stance of Japanese policymakers towards web3 and even the PM highlighting its potential to change the internet for the better. It’s likely that we will see more changes for the better.

Dentsu partnering with SUI

Dentsu, one of the biggest advertising companies, has joined forces with Mysten Labs, the entity developing the Sui blockchain. Through its affiliate company, 3RD GEAR, Dentsu is looking to tap into Mysten Labs' expertise in the web3 space to explore the creator economy.

Together, the parties aim to build a creator economy leveraging decentralized identities on the SUI blockchain. The creator economy describes all the economic activity creators generate, including artists, writers, streamers, gamers, and even developers. It is forecasted to continue growing in Japan thanks to new monetization models and social networking platforms. NFTs have been a primary way to connect web3 with the creator economy and will also play a major role in this collaboration.

Takeaway: The creator economy has a huge impact on advertising, as the rise of influencer marketing has shown. Dentsu isn’t the first advertiser to realize the potential of web3 for its advertising business, but it’ll be interesting to see how the creator economy x advertising narrative plays out in a country that has embraced even virtual characters such as Vtubers.

As an aside, Sui is taking its name from one of the readings of the Japanese Kanji for water: 水

Ponta Points are coming on-chain

The Japanese tech company Play!Think has partnered with one of the largest loyalty scheme operators, Loyalty Marketing, to bridge the current web2 experience to web3. Ponta points the loyalty program in question is already used by over 112 million members and is available at over 280,000 stores.

The partnership aims to offer web3 services to existing users, and leverage blockchain to reduce friction points for users as well as export the scheme outside of Japan. It’s expected that Play!Think’s NFT Cloak, a service that allows web2 accounts to seamlessly handle NFTs and other crypto assets, will be used to facilitate the transition.

Furthermore, Loyalty Marketing and Play!think will create joint games and offer digital trading card games to promote their services. If they succeed and onboard a majority of existing users to web3, this could quickly grow into one of the most successful web3 loyalty programs.

Takeaway: The Japanese loyalty market is expected to continue growing to a size of 15936.7 million by 2026 offering huge potential for any web3 provider to capture interest and provide the right infrastructure to unify a fragmented landscape of points. Web3 also aids in expansion abroad, which seems to be the next step for loyalty programs, as Rakuten has showcased when partnering with Marriot.

In Other News

• 7Bank is distributing soulbound NFTs to donors straight through their ATM network
• Binance is coming back to Japan this year
• Blockchain developer Hashport raises $8.5 million in its latest funding round
• Shinsei Galverse launches Music Video in collab with Multi-Platinum artist Tove Lo

Events

• Until August 27th: HR3 Hackathon
• August 7th BSPI x CryptoBase Joint Project #10

Japan Fact: If you love Pokemon, August is your month. Every August, you can see 2,000 dancing Pikachu taking over the streets of Yokohama, a city right next to Tokyo. This year the Pokemon Parade will take place on August 14th. And if you can’t make it, you can still enjoy footage from previous years. ✨